Tata Projects scales its way up the infra ladder one brick at a time

Noida airport latest in a series of assignments bagged by the company in recent years

Asia’s biggest airport at Jewar in Uttar Pradesh will have the name of a relatively young player as its builder: Tata Projects.

On Friday, the contract to construct the Noida International Airport was awarded to the Hyderabad-headquartered firm, beating storied players such as Larsen & Toubro and Shapoorji Pallonji group, who’ve burnished their infrastructure credentials for well over 80 years and 150 years, respectively.

Tata Projects, in contrast, has been in existence for just over 40 years, but has already acquired expertise in executing large and complex urban and industrial infrastructure projects, and in implementing complete mining and metal purification systems, its website said.

The Noida airport project, for instance, is one among a series of high-profile assignments that the Rs 13,679-crore company has bagged in recent years, including construction of the new Parliament building as part of the government’s ambitious Central Vista project in Delhi as well as the Trans Harbour Link in Mumbai.

The Mumbai Trans Harbour Link, in particular, will be a complex project for the company as it endeavours to improve the connectivity between Mumbai and Navi Mumbai via a sea bridge, the largest such in the country and critical for the economic development of the Mumbai Metro­politan region, which has been growing fast over the years.

The project, whose cost is nearly Rs 18,000 crore, is expected to be completed by 2023 and will feature approach sections, interchanges, and intelligence transport systems, which will be monitored by the traffic control centre.

A recent report by India Ratings said Tata Projects had the wherewithal to complete its projects, including both the new Parliament building and the Mumbai Trans Harbour Link, thanks to a well-diversified portfolio. which includes urban built forms, which forms 28 per cent of its order book, construction and environment as well as plants and systems. These make up 17 per cent each of its order book, and transportation, which constitutes 11 per cent of its order book.

Covid-19 did take its toll on the company’s order book, which according to its last available annual report for FY21, fell to a low of Rs 8,860 crore from a high of Rs 28,190 crore in FY19. The order backlog, led by the new Parliament building project, which the company bagged in September 2020, stands at Rs 48,497 crore.

India Ratings in its report said the company’s top orders contribute a healthy 46 per cent to its overall order book, both in FY21 as well in FY22, which inspires confidence, since the default risk will remain low.

“India Ratings believes that with the likely new projects backed by the implementation of the National Infrastructure Pipeline and additional infrastructure capex planned across the country, it will improve Tata Projects’ revenue visibility over the medium term,” the agency said in its report.

Data compiled by BS Research Bureau shows that the company’s turnover for FY22 is back to pre-Covid levels visible in FY19, when the topline was Rs 13,417.7 crore. It reported a net loss, however, in FY22 versus a profit of Rs 244.3 crore in FY19, on the back of volatility in commodity prices, which has increased cost of construction for the company.

Indeed, most infra companies, including L&T, have faced the challenge of increasing costs in FY22, due to volatility in both currency and commodity prices.

“The  Ebitda margins have moderated to 3.2 per cent for Tata Projects in the first half of FY22 owing to commodity inflation and a recognition of Covid-19 overheads. However, the situation should improve in the coming years on account of the company being qualified to bid for projects in almost all the segments it is catering to, coupled with an improvement in the quality of its order book,” India Ratings said.

While total debt has grown over fivefold in the past five years to Rs 3,684 crore on higher working capital requirements, the company, said India Ratings, was working to improve its balance sheet by increasing focus on debtor-claim realisation, increasing advance billings, and liquidating unbilled revenue.